Paris (TDI): Global oil supplies are expected to exceed demand in the fourth quarter of 2026, following a rise in Gulf exports that pushed the oil market into surplus in October for the first time since the Iran war, the International Energy Agency (IEA) said on Friday.
In its monthly oil market report, the Paris-based agency said Gulf oil shipments reached 18.4 million barrels per day (mb/d), despite continued attacks on tankers attempting to navigate the Strait of Hormuz. However, shipments remained 26% below pre-war levels.
“The oil market is showing tentative signs of rebalancing, with global oil supplies surpassing demand for the first time since the outbreak of the war in Iran,” the IEA said.
Oil prices have declined sharply in recent weeks as more vessels have resumed passage through the strategically important Strait of Hormuz under US naval escort, despite persistent security risks.
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Iran effectively shut down the crucial waterway during the initial months of the war launched by the United States and Israel in late February, disrupting global energy supplies.
According to the IEA, global oil supply increased by 3 million barrels per day in September, followed by a further 2.3 million barrels per day in October, largely supported by the recovery in Gulf exports.
However, the agency projected that global oil demand would decline by 2.7 million barrels per day over the course of 2026, as prices remain significantly above pre-war levels, accelerating the shift towards electrification and improved fuel efficiency across the global vehicle fleet.
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Despite signs of improving crude oil availability, diesel supply remains a major concern. Diesel prices reached $180 per barrel in October, approximately 77% higher than pre-war levels.
The IEA attributed the surge partly to Iranian attacks on refineries in neighbouring Gulf countries, which Tehran accused of supporting US military operations. Meanwhile, Ukrainian strikes on Russian refineries and other energy infrastructure have further disrupted diesel supplies to international markets.
“The severe tightness in product supply, especially for diesel, remains the overriding concern of the broader market and consumers,” the agency said.
The IEA’s assessment highlights a growing divide in the global energy market, with crude oil supplies showing signs of recovery while disruptions to refined petroleum products, particularly diesel, continue to put pressure on consumers and industries.
